G.R. No. 33584, December 15, 1930
MARCELO ENRIQUEZ, plaintiff-appellant, vs. PHILIPPINE NATIONAL BANK, ET AL., defendants-appellees.

FACTS

Marcelo Enriquez was indebted to the Philippine National Bank (PNB). To satisfy the judgment debt, two parcels of land owned by Enriquez were attached and sold at public auction, with PNB as the highest bidder. Later, Enriquez’s right of redemption was also sold to Laureano Abella. Subsequently, the lands were forfeited by the Government due to non-payment of land taxes. At Enriquez’s request, PNB redeemed the lands from the Government by paying the delinquent taxes. The trial court declared the auction sales null and void but recognized PNB’s right of retention for having paid the taxes. Enriquez appealed, claiming he was entitled to damages for PNB’s possession of the lands and to a sheriff’s penalty.

ISSUE

1. Whether Enriquez is entitled to damages for PNB’s possession of the lands after redemption from the Government.
2. Whether the provincial sheriff should be penalized under the Code of Civil Procedure for alleged bad faith in conducting the auction sale.

RULING

1. On the claim for damages: The Supreme Court modified the trial court’s decision. It held that since the judicial sale was null and void, the lands reverted to Enriquez. However, when PNB redeemed them from the Government, it acted as a judgment creditor and acquired a lien on the properties under Section 377 of the Administrative Code. PNB’s possession, with Enriquez’s consent, was akin to that of an antichretic creditor. As such, PNB was entitled to apply the fruits of the land to the interest and principal of the debt but must account for the net proceeds, deducting expenses and the redemption amount with interest. The Court thus ordered PNB to render an accounting of the net proceeds from the lands during its possession.
2. On the sheriff’s penalty: The Court found no sufficient proof of bad faith on the part of the sheriff. The sheriff’s act of publishing the notice in a Cebu newspaper (believed to have circulation in Oriental Negros) and reducing the sale price due to the tax redemption did not constitute bad faith, as the law grants a lien to a redeeming third party. The claim for penalty was denied.
The appealed judgment was AFFIRMED with the modification requiring PNB to account for the net proceeds from the lands. Costs were imposed on the appellant.